Tax regulations in the UK are not designed to be so complicated that only professionals can handle them, but as they evolve constantly, it’s still important to keep up to date with the latest changes so you can understand the implications of any that affect you.

At the heart of a correctly filed tax report are accurate records and double-checked calculations. The third ingredient, however, is time – the time needed to keep your records up to date, to identify any unexpected tax liabilities and to make sure you’re aware of all tax opportunities. The less experience you have, the more time you’ll need to take.

That’s why many sole traders still want their accountants to do their self-assessment.

Should You Ask an Accountant for Your Self-Assessment?

If you don’t have time to do your self-assessment with the diligence it deserves, or if you’re not confident in your understanding of all relevant tax regulations, you might want to have an accountant handle your self-assessment tax returns. In fact, this is one of the government’s own suggestions!

Sources of Tax

The fact of the matter is that the majority of incorrect self-assessments are the result of tax sources that the filer may not have been aware needed to be part of the assessment.

It’s not just about the income received directly from your business. If you also have income from renting property or you’ve sold items qualifying for capital gains tax during the year, these also need to be represented. Even interest on your savings should be taken into account!

A sometimes-controversial factor is the High Income Child Benefit Charge. If you or your partner receive child benefit and your individual income is above £60,000, you qualify for this charge. This can also be true if someone else receives child benefit for a child who lives with you, provided they contribute at least an equal amount toward their upkeep.

This charge is levied to reduce the government’s additional spending for the keep and care of children in cases where at least one of their parents or guardians is capable of shouldering the full amount. The controversy comes from the way it is levied, meaning that if you were near the threshold and your income increases above it (but not by much), you may feel unduly affected.

Claimable Expense Types

As a self-employed individual, a number of different categories can be expensed.

This blog is not the place to go into each one in detail, but if you weren’t aware of any of the following being eligible for expenses, you may be missing out on these and others:

• Staff costs (if any)
• Office costs including phone bills, stationery, etc.
• Financial costs (insurance, bank charges, etc.)
• Costs associated with stock or raw materials
• Business travel costs
• Marketing expenses, including digital marketing
• Any training courses taken for the purpose of growing your business

As you can see, going into the specifics of what can be expensed under which circumstances would take much longer than this article – instead, we recommend you consult an accountant!

The post Should I Use an Accountant for My Self-Assessment? first appeared on ICS Accounting.

Bookended by two Bank Holidays, May has meant holidays, hitting the road and having great times at ICS. With the sunshine finally getting the memo, we’ve been enjoying getting out for fresh-air activities, summer crafts, and some very local nature-watching! With networking events, partner agency meetups, and some vital warnings about spotting unscrupulous attempts to circumvent regulation and compliance (which could put YOU at risk), grab a spritzer and read on!

Office Insight

Moving into rolling holiday season (we’ll name-and-envy later), we kept up the dedication and focus on the home front, continuing to hit record sales and contractor payments. It’s important to have days where the whole sales team rest their train apps and hit Head Office to update, collaborate, support celebrate and motivate each other (with some friendly challenges!). In line with the launch of JSL legislation, we launched our new Compliance Portal, further enhancing our Agency partner services, providing the full transparency and peace of mind that’s the ICS USP.

Welcomes & Well Dones

Welcome Luke Gregson, qualified accountant starting his ICS Accountancy journey. Due to our expanding reputation and client portfolio, we’re continuing to recruit, revelling in offering not just jobs but training, professional qualifications and rewarding career opportunities in our hometown. Well done to Kim and Nathan for passing their AAT (Association of Accounting Technicians) exams.

Welcome back from maternity leave to ICS Finance Director Maggie. And a huge well done to Maggie’s eldest, helping his football team bring home the League Cup, and being named Player of the Match. Nothing beats supporting local clubs, grassroots sport, and community initiatives.

Getting Crafty, Horsing Around

We’re all about the details, which we put to the test with a glass painting workshop, organised by our social team. Great for mindfulness- and now we’ve got pretty glassware for cheeky après-office Prosecco! Providing support in more ways than one, DIY supremo Colin put together a riser desk that, at the time of writing, is still standing…

A fabulous day at the Races with our friends from AMB Recruitment Group, award-winning construction, engineering and technical recruitment specialists, thanks to Megan for whipping the ICS contingent over the line- we even celebrated a few winners!

Out & About

Jodie and Helen attended the FCSA forum (Freelancer & Contractor Services Association) in Manchester. The UK’s leading professional membership body dedicated to raising standards and ensuring compliance within the contractor market, it was a day of great networking and thought-provoking compliance presentations; lots of valuable takeaways.

As usual, our sterling sales and partnership teams were out and about, including Alison and Kieran heading to London, and Megan taking Michaela to meet some of her fantastic agencies and clients. Nothing strengthens that genuine personal relationship like putting faces to names and catching up in person, so if you’re in the market for a meetup, drop your ICS partner a message, and we’ll drop in!

Holidays & Hitting the Pavements

Staff heading off on well-deserved sunny breaks included Alison, Kieran and Colin, returning refreshed and raring to go. We understand there was much selfless auditing of various bars and all-inclusive buffets!

Putting us all to shame, ICS Management Accountant Luke ran the Blackpool Festival Marathon, finishing an incredible 73rd out of 673 runners with a time of 3:13:17- a huge well done!

Award Nominations are In

It’s that (dreaded) time again- awards nomination, where we have to distil and shout up what we do. Always a bit squirm-inducing, but if you do something great, there’s no shame in receiving recognition- and spreading the word. It’s actually a valuable exercise in taking pride in what we have achieved, passing on well-deserved thanks- and identifying how we can stretch ourselves further. The forms are in, so it’s fingers crossed. Awards are great, but just the icing on the cake of what we love driving for, every day.

View From the Window

‘Springwatch’ is back on the TV, but we’ve got our own Nature Corner at ICS, with compliance admin Jamie enjoying front-row seat to a burgeoning wood-pigeon nest.

Beware of Imitations!

Unsurprisingly but sadly, just weeks after the enforced JSL legislation, we’re already hearing reports of unscrupulous businesses pushing products which supposedly circumvent it. When HMRC inevitably catch up with them they’ll disappear, leaving contractors in the lurch and agencies with the liability. Even more reason to choose an accredited accountants for peace of mind, trust, care and compliance. We’re always happy to advise, just get in touch.

Even more worryingly, Chris Bryce, Chief Executive of the FCSA, warns that some increasingly desperate dodgy umbrella companies are claiming to be FCSA Accredited, when nothing of the sort. FCSA Accreditation is awarded only to providers who have passed a regular independent, rigorous audit covering tax compliance, employment law, financial integrity, and supply chain transparency. Luckily, it’s also transparently verifiable: at http://www.fcsa.org.uk/directory-of-members/ (you’ll find ICS there!). If you discover or suspect someone to be claiming false FCSA accreditation, please flag it to them for investigation.

For more up-to-the-minute industry information, regulatory advice and invaluable insights, keep an eye on our regular blog posts.

Wishing you a fabulous midsummer,

Your ICS Accounting Team

The post Going Racing, Marathon Time, How to Spot Fraudsters, and ‘SpringWatch’ Outside the Window- a busy May at ICS first appeared on ICS Accounting.

There are times, though, when a business can be performing profitably according to the books, but your bank balance is still low at any given time and you can struggle to make payment deadlines.

So how do you change that?

Improve Your Payment Cycle

Outside of shops, almost every business finds themselves doing some work on credit. Whether it’s 30-day terms (or even 90-day) as standard or your contract technically requires payment in advance, but a regular payment slips when the work still needs to be done, often a certain amount of your profitability is still waiting to be received.

By instituting tighter payment controls and by pushing your dunning cycle more efficiently, you can ensure your cashflow gets better and more in line with your profitability.

At ICS Accounting, we’ve heard many small business owners talk about the point where they realised some late-paying customers needed cutting out, even though they represented a significant amount of the company’s work. The hidden cost of delayed payment can sometimes more than wipe out your profit margins.

Of course, many customers who pay a little late sometimes are still valuable steps in building your own business. Cutting one off is something you need to be careful about doing – but it underlines the importance of knowing the true value of every customer.

Frequent Financial Review

How do you know the true value of your big customers? Make sure you review the books regularly, and at any time a lack of cashflow affects your business (when your payments are delayed, or when you miss out on opportunities because instead you have you make a payment), make sure you know whose payments were outstanding at that time.

This can be even more effective than just tracking which businesses pay late and how late they pay, but we recommend doing both. Confirming patterns in late payment and having the data to back them up gives you better decision making power than just having a vague feeling that Customer X pays late every so often.

While this does mean more time studying your financial information than you might spend otherwise, that has its own benefits. The longer it’s been since you looked at your management accounts, the less clear your picture of your situation is.

Build in a Buffer

The best way to keep your cashflow strong is to remember that as well as predictable payments (tax bills, VAT payments, etc.), there are one-off or unexpected payments that need to be made. By ring-fencing some of your paid profit as an emergency buffer you have more flexibility in these situations.

Know Your Tax Liabilities

This is one of those categories that should go without saying but doesn’t. We’ve quite often spoken to small business owners who weren’t clear on what tax legislation changes might do to their bill, or who didn’t fully understand what tax and National Insurance payments add to a new employee’s paycheque in costs, or who had a rough idea in mind of what tax they’d owe based on the previous year but had a much more successful year.

You really do need to be ready for your HMRC payment; while they will usually work with you on payment plans if you need to, these come with a significant additional cost (not to mention messing up your cashflow for the following year). If you can’t keep up to date with tax calculations, relevant regulatory changes, and the rest, why not get in touch? We’re always happy to help.

The post Managing Cash Flow as a Small Business first appeared on ICS Accounting.

As always with these blogs, we would recommend consulting directly with an accountant as specific situations do vary.

What is the Basic Rate for Dividend Taxes?

Beginning this past April 6^th, the Basic Rate has risen from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. The Additional rate remains fixed at 39.75%, and the dividend allowance remains at £500.

The tax on dividends remains lower than the equivalent tax on salary, but this cost has changed; the most tax efficient way to receive your payment will have changed in addition.

Obviously the best course of action will vary wildly between any two contractors or businesses depending upon your requirements. Other factors work taking into consideration include:

The ISA Allowance

Dividends received on investments held in an ISA are tax free; the maximum amount you can invest in ISAs each tax year is currently set to £20,000, and this allowance cannot be carried forward to future tax years.

Investments held inside an ISA are also exempt from income tax and capital gains tax. This is very tax efficient, but of course does require you to be able to set that money aside – so how far you can pursue this will vary not just according to your business results but also your own personal needs.

Pension Contributions

As with the ISA, paying dividends into a pension fund allows you to save for the longer term provided that you still leave yourself enough liquidity to handle the year’s expenses – and you should include some allowance for safety when you do!

Pension contributions qualify for tax relief at the marginal rate, which can significantly increase the savings made on any proportion of your income you’re willing to set aside for the long-term future.

Taxation Evolves

The best strategy for tax efficiencies will always shift slightly from year to year, and sometimes the ramifications of a change will not be immediately obvious. To make sure you maximise your available opportunities while still remaining fully compliant, we recommend regular discussions with your accountant.

Contact us today to find out how we can help.

The post Paying Dividend Taxes first appeared on ICS Accounting.

Awareness is Assurance

We work closely with many contractors with very different situations. Whether they’re outside or inside IR35, on long-term contracts with a steady income, or moving from contract to contract and juggling different revenue streams, every contractor needs to keep their accounts in order.

One way we’ve helped some of our clients is by making sure they understand what the different tax codes mean, so they can tell whether or not there’s going to be an issue in time to get it fixed.

The below isn’t a perfect substitute for working with a contractor accountant, but it can help you understand whether your latest payslip is also a ticking time bomb.

Reading The Tax Code

For the 2026/27 tax year, the country’s most common tax code is:

1257L

The four numbers to begin with specify your tax-free personal allowance for the tax year. This code ties to the standard personal allowance of £12,570.

The letter or letters following the numbers specify more to do with your calculations. ‘L’ simply means you’re entitled to the standard tax-free personal allowance.

However, if you have more than one job, and your personal allowance is entirely allotted to one of them, you may instead have the code BR. This stands for Basic Rate, meaning that all income from this source is taxed at the basic rate.

You may also see a T tax code – this means that your code will include other calculations needed to work out your personal allowance.

Some revenue streams are not taxed. When this is the case your tax code will read ‘NT’. For contractors, the most likely reason to receive an NT code is that you’re reporting this income to HMRC in some other way, but NT| codes also apply for some non-UK residents, or for those working while bankrupt.

Regional Tax Codes

If you’re working in Wales or working remotely for a Welsh business, you’ll see a ‘C’ in the code. This simply means that your income will be taxed using the Welsh rates. Similarly, a ‘S’ in your code means your income from that source is taxed at the Scottish rate.

Both the C and S codes combine with other relevant codes.

This means, for example, that if you’ve completely used up your Personal Allowance, and you have two income sources from remote jobs, one based in England and the other in Wales, one will have the ‘0T’ code and the other will be marked as ‘C0T’.

Emergency Tax Codes

If you see a ‘W1’, ‘M1’, or ‘X’ on your tax code, this means you’re on an emergency tax code. W1 is for weekly payments, m1 for monthly payments, and X for when pay dates vary. Some payroll software marks these as ‘NONCUM’ instead.

As the name suggests, you shouldn’t be on an emergency tax code for an extended period of time. It is not uncommon for emergency tax payments to be higher than you would otherwise pay, and this is usually handled later on. We would recommend you pay attention to your deductions during and immediately after the emergency tax code is resolved.

Higher Rate Tax Codes

D codes – that is, ‘D0’, ‘D1’, and in Scotland ‘D2’ and ‘D3’, specify that all income from that source is taxed at higher than basic rates, usually because another income source already reaches the maximum for the basic rate:

• D0 – Higher rate
• D1 – Additional rate
• CD0 – Welsh higher rate
• CD1 – Welsh additional rate
• SD0 – Scottish intermediate rate
• SD1 – Scottish higher rate
• SD2 – Scottish advanced rate
• SD3 – Scottish top rate

K Tax Codes

K codes indicate that you already have income or deductions higher than your personal allowance which are not already being taxed.

There are a number of reasons for K codes. Probably the most common is that you are receiving your state pension or a taxable state benefit. If you’re paying tax owed from a previous year, or if your savings provide more interest than your personal savings allowance, you will receive a ‘K’ tax code.

Marriage Tax Codes

The Marriage Allowance permits married individuals with an income below their personal allowance to transfer £1260 of your personal allowance to their husband, wife, or civil partner.

When this is the case, the individual transferring their personal allowance away will see an ‘N’ on their tax code. Their partner will see an ‘M’ on theirs.

Taking Your Tax Code into Account

Especially when you have multiple income streams, either lasting throughout the tax year or not, your tax codes can help you understand your income in real terms more easily. However, they can also be daunting to calculate. If you want any help understanding what your tax codes mean for you, please get in touch to arrange a chat.

If you ever receive a payment with the wrong tax code, there’s an increased likelihood of overpayment or underpayment of tax at the end of the year. The penalties associated with underpayment are obvious but, of course, overpayment introduces its own complications, especially for anyone whose cashflow can vary from month to month. This makes contractors particularly vulnerable to issues arising from incorrect codes.

Awareness is Assurance

We work closely with many contractors with very different situations. Whether they’re outside or inside IR35, on long-term contracts with a steady income, or moving from contract to contract and juggling different revenue streams, every contractor needs to keep their accounts in order.

One way we’ve helped some of our clients is by making sure they understand what the different tax codes mean, so they can tell whether or not there’s going to be an issue in time to get it fixed.

The below isn’t a perfect substitute for working with a contractor accountant, but it can help you understand whether your latest payslip is also a ticking time bomb.

Reading The Tax Code

For the 2026/27 tax year, the country’s most common tax code is:

1257L

The four numbers to begin with specify your tax-free personal allowance for the tax year. This code ties to the standard personal allowance of £12,570.

The letter or letters following the numbers specify more to do with your calculations. ‘L’ simply means you’re entitled to the standard tax-free personal allowance.

However, if you have more than one job, and your personal allowance is entirely allotted to one of them, you may instead have the code BR. This stands for Basic Rate, meaning that all income from this source is taxed at the basic rate.

You may also see a T tax code – this means that your code will include other calculations needed to work out your personal allowance.

Some revenue streams are not taxed. When this is the case your tax code will read ‘NT’. For contractors, the most likely reason to receive an NT code is that you’re reporting this income to HMRC in some other way, but NT| codes also apply for some non-UK residents, or for those working while bankrupt.

Regional Tax Codes

If you’re working in Wales or working remotely for a Welsh business, you’ll see a ‘C’ in the code. This simply means that your income will be taxed using the Welsh rates. Similarly, a ‘S’ in your code means your income from that source is taxed at the Scottish rate.

Both the C and S codes combine with other relevant codes.

This means, for example, that if you’ve completely used up your Personal Allowance, and you have two income sources from remote jobs, one based in England and the other in Wales, one will have the ‘0T’ code and the other will be marked as ‘C0T’.

Emergency Tax Codes

If you see a ‘W1’, ‘M1’, or ‘X’ on your tax code, this means you’re on an emergency tax code. W1 is for weekly payments, m1 for monthly payments, and X for when pay dates vary. Some payroll software marks these as ‘NONCUM’ instead.

As the name suggests, you shouldn’t be on an emergency tax code for an extended period of time. It is not uncommon for emergency tax payments to be higher than you would otherwise pay, and this is usually handled later on. We would recommend you pay attention to your deductions during and immediately after the emergency tax code is resolved.

Higher Rate Tax Codes

D codes – that is, ‘D0’, ‘D1’, and in Scotland ‘D2’ and ‘D3’, specify that all income from that source is taxed at higher than basic rates, usually because another income source already reaches the maximum for the basic rate:

• D0 – Higher rate
• D1 – Additional rate
• CD0 – Welsh higher rate
• CD1 – Welsh additional rate
• SD0 – Scottish intermediate rate
• SD1 – Scottish higher rate
• SD2 – Scottish advanced rate
• SD3 – Scottish top rate

K Tax Codes

K codes indicate that you already have income or deductions higher than your personal allowance which are not already being taxed.

There are a number of reasons for K codes. Probably the most common is that you are receiving your state pension or a taxable state benefit. If you’re paying tax owed from a previous year, or if your savings provide more interest than your personal savings allowance, you will receive a ‘K’ tax code.

Marriage Tax Codes

The Marriage Allowance permits married individuals with an income below their personal allowance to transfer £1260 of your personal allowance to their husband, wife, or civil partner.

When this is the case, the individual transferring their personal allowance away will see an ‘N’ on their tax code. Their partner will see an ‘M’ on theirs.

Taking Your Tax Code into Account

Especially when you have multiple income streams, either lasting throughout the tax year or not, your tax codes can help you understand your income in real terms more easily. However, they can also be daunting to calculate. If you want any help understanding what your tax codes mean for you, please get in touch to arrange a chat.

The post Understanding Tax Codes first appeared on ICS Accounting.

The year is turning, bringing welcome spring warmth and sunshine (at last!). Accountants’ diaries are largely marked by HMRC dates, but as we welcome more contractor and umbrella clients each month, it’s lovely to get insight into different seasonal cycles, from farming and construction to leisure and hospitality. Like you, it’s been a busy April at ICS, with Q4 to Q1 changeover, continued expansion, new legislation, and lots of teamwork, travel and treats: read on to find out more. 

Office Insight 

With the start of the new financial and personal tax year, we started the month running. We finished the registration of our new joiners (welcome all!), and the recruitment drive to ensure we continue to offer the level of service which underpins our 5 Star Trustpilot Rating.

Our teams continue to work with dedication, energy, resilience and spirit. Jamie from our Compliance team put together some team hampers and desk treats, putting a spring in our step.  Look up ‘working together’ in the dictionary, and ICS faces should be smiling back at you! 

Quite the Journey 

Year-end into Q1 is always a good opportunity to reflect and plan, which revealed some weighty KPIs from the last 12 months including: 

• Growth of 59% for new registrations 

• Over 99% of calls answered within 4 rings 

• WhatsApp and Email queries are answered within 60 minutes 

• Payroll accuracy measured at 99.99% across the year 

And don’t forget we enhanced our Umbrella Employee Benefits Portal, giving access to a wider range of benefits including a free will writing service, 24/7 online GP services, wellbeing support and helplines, plus increased exclusive deals, shopping and leisure discounts. 

People News

Welcome to our newest recruits to the Business Executive role, Jasmine and Rachael. How do people find their home at ICS? We find some of our best people through referrals from existing ICS team members, which is how Rachael came to us, looking for a change of career and new challenge. In her excellent interview, Jasmine revealed she wanted to move from an on-road sales role to a team-based environment. Challenges, teamwork? Look no further! 

We may have enjoyed the Easter break, but the studying doesn’t stop at ICS! Well done to Luke, who has passed his ACCA (Association of Chartered Certified Accountants) Financial Management exam, and Chantelle Barnes, who has gained her Management Accounting Techniques AAT (Association of Accounting Technicians) Level 3. 

Out & About 

This month, Megan Green and Alison Waterhouse covered most of the country: London, Staffordshire, Liverpool, Hertfordshire, Essex, Ipswich, Manchester and the Midlands, meeting new Partner Agencies, catching up with contacts and being there for vital face-to-face support. Keep an eye on their LinkedIn profiles for where they’re heading, and if you want to meet and chat about the recent changes, touch base, or any way we can assist, just drop us a message. 

Community

The summer sports season has started, a good excuse to get out and see some great local grassroots, as keen supporters of the Westmorland Cricket League. We might have to admit that our dreams of scoring a hat-trick at the World Cup are just that now, so it’s great to support up-and-coming talent by sponsoring the kit for neighbourhood football team, Bowerham Juniors FC U9s Thunder.  

Not helping our fitness goals, but a lovely surprise received with thanks from premier Sage Software, who sent us a yummy treat selection from Biscuiteers, the original hand-iced biscuit company! 

View from Outside the Office 

With spring finally here, the team have been enjoying their well-earned après-work time. The nicer weather has tempted some back to the gym in earnest, and the fitness habit is clearly rubbing off, with one team member’s daughter joining her on her first park run. With beautiful Williamson Park and Morecambe Promenade to choose from, local Parkrunners are spoiled for choice!  

Some have escaped these shores, with Lake Como. Others have their sights on summer holidays, with Skiathos and Eygpt topping the list for envy-making dream getaways.  

We’ve had birthdays celebrated, welcomed a new niece, and becoming a Godparent. One member of the team has even turned to The Dark Side- as a change from being blonde, that is!  

The Outlook’s Bright 

The initial rollout of Making Tax Digital and some of the biggest changes to Umbrella payroll compliance in years, including Joint and Several Liability (JSL) for recruitment agencies, many operators have a lot to take on board. Focused on being ahead of the curve, it’s busy, but ‘business as usual’ for ICS: the only umbrella company in the UK currently with all four payment solutions FCSA accredited. 

If you’re feeling out of your depth, want to check where you stand, or are interested in discovering more about any of the outstanding bespoke contractor, accountancy and umbrella services we offer across a wide range of sectors and specialisms, just get in touch. And remember to check out our regular blog posts for the latest industry news, insights and invaluable advice. 

Wishing you a happy May- not MayDay!  

Your ICS Accounting Team 

The post Leaping Into the New Tax Year, Not Tripping up on New Legislation! first appeared on ICS Accounting.

Errors can easily creep into bookkeeping – it’s why reconciling is so important – and it gets easier to accumulate errors if:

• You’ve neglected your records for a while and a deadline is coming up
• You’re having or you have had issues with record storage, physical or digital
• You’ve ever had to update your books while tired at the end of the day
• Regulations, legislation, or guidelines have recently updated and you haven’t had the chance to review them

As you can imagine, when we’re onboarding new clients at ICS Accounting we quite often catch discrepancies, and unpicking the evidence to get at the original problem has made us familiar with a lot of common errors. So here are some things you should definitely watch for.

Separation of Personal and Business Accounts

For sole traders, this is easily the most common issue. We highly recommend creating a business account as well as a personal account – it may not change your liability, but it makes it much easier to monitor your cashflow.

If you’re still waiting for a client to pay that overdue invoice, it can be tempting to pay business expenses with your personal card (always assuming you have the money there). If you have no other option, of course we wouldn’t tell you not to do that! But make sure you document this clearly as soon as possible. Earmarking your money for business and personal use is a huge part of the sole trader financial process, and failing to do so can cost businesses.

It’s not just sole traders who have to deal with this, either. You might order work items via your personal Amazon, and if so, you need to ensure the invoice makes it to your work records or reconciling your balance sheet will have an extra, unnecessary level of confusion.

Lost Receipts

Most of us grow up only really worrying about receipts for very expensive purchases or for gifts. In business, however, lost receipts can become a really big problem. Learning new habits for this can be challenging.

Most modern accountancy software will let you scan your receipts in on your phone and digitise them. We recommend doing this as soon as possible for multiple reasons:

• Your records will be more up-to-date
• It ensures they don’t get lost
• It ensures they’re scanned before the ink on cheap receipts rubs or fades away to unreadability
• Handwritten receipts (still common in some industries) can be harder to read, and still knowing the information on them makes it much easier.

Get into the habit of scanning receipts as soon as possible, and create a safe space they can be stored until they can.

Making Assumptions

Do you know what type of expense that payment was? Is your depreciation calculation correct? What’s the rate for National Insurance Contributions (NICs) on the income you’ve made this month? Are you logging that Christmas bonus against tax using the usual bonus rules or the Christmas rules?

If you’re not sure, check and double check, especially if the reason you’re not sure is that it last came up a couple of years ago. Tax legislation evolves every year, and along the way many subtle distinctions are created. This means that if you’re not fully familiar with the current situation, you could easily end up with incorrect reports or paying your taxes incorrectly. Both of these have real and serious consequences.

So if you’re not sure, double check, and if you are, ask yourself how sure you really are.

Missed Tax Opportunities

Yes, you should always take the time to make sure you understand your tax obligations. At the same time, it’s not uncommon to miss out entirely on tax deductions you’re eligible for simply because you didn’t know they existed.

Failing to recognise your tax obligations can result in significant penalties. Missing out on tax opportunities carries no official penalty but can make the difference between a business that survives and one that thrives.

Rushing The Accounting Process

Accurate bookkeeping, unfortunately, isn’t something that can be done quickly. It requires an up-to-date knowledge of current financial legislation, attention to detail, and a willingness to take time to get it right.

At the same time, accurate bookkeeping is a key pillar of any successful business. How confident are you really that you can hold all your business’ current assets and liabilities in your head without double-checking?

Correct accounting isn’t just vital for your tax obligations. It’s also a cornerstone of good decision making. If you think yours needs support, please get in touch.

The post Bookkeeping Errors to Avoid first appeared on ICS Accounting.

But as a sole trader or a limited company director, especially if you’re a contractor limited company or a small business, it can be a lot harder to figure out how much to pay yourself under these circumstances. In many cases, your absence will mean a measurable drop in company income; if you’re the only person in the business, it may mean a complete halt in revenue.

Under these circumstances, how much you can pay yourself (and how long you can pay yourself for) will depend on a number of different factors. Let’s take a look.

Business Liquidity

Most obviously, you can’t pay yourself more than your business’ cashflow permits. This is another situation where your management accounts can be essential. Regularly reconciling your accounts remains the best way to understand your actual financial position in real terms.

For the most part, businesses have significant fixed costs that don’t go away even if you’re not there to manage the ship; in many cases, the amount of expenses incurred by actually doing the work are negligible in comparison.

Forecast Horizons

As with liquidity, your management accounts have a huge role to play here. That information can significantly extend the timescale for your planning. From there you have a clearer picture of how long you could afford to step back from the business before you run into issues – which is another upper limit on this situation!

Deadlines

Here, alas, as accountants we can’t point you in the right direction. You’ll still need to be aware of any upcoming deadlines, how much work each of these represents, and how much time you’ll have to get it all done.

The above factors mostly limit how long you can take off, but they’re also a factor in setting an upper limit in what you can pay yourself. Having defined our upper limits, let’s look at the lower limits.

Personal Needs

The last factor to take into account is much simpler, and again it’s one that can’t easily be read from your business finances. Simply put, how much will you need over the time you’re not working? Subtract from this any of your existing personal finances you’re willing to spend and you have a lower limit.

Unfortunately, unlike an employee, it’s possible at this point to look at the maths and decide that voluntary time off isn’t possible, or at least isn’t worth it. However, sometimes this isn’t a choice; a significant illness or broken arm at the wrong time can have a huge impact on your business until it’s grown past a certain point.

We do recommend business interruption insurance against situations like this, but in the event you find yourself facing harsh decisions over how long you can afford to be away or how much you can justify taking from the business while you are, we also encourage you to reach out to us. We’ll be happy to help you get clarity on the numbers – something that’s essential if you want to make the right decisions.

The post How Should You Pay Yourself When You’re Not Working? first appeared on ICS Accounting.

Interpreting Financial Reports

It’s certainly true that engaging an accountant frees up the time you’d spend in putting together financial records and reports, both those you use internally and those that need to be submitted to HMRC, Companies House, or any other official institution. It’s also true that their experience means they will take less time to achieve this than you might yourself.

In a world of regularly evolving legislation, it’s even true that an accountant will be able to maintain compliance more efficiently and effectively. However, all of this neglects one of the most important services an accountant can provide; interpretation.

Until you’ve built up years if not decades of familiarity with financial reports, it can be hard to read more than the most basic information in them. Understanding what these reports say about liquidity, cash flow, and about profitability, not just of the business as a whole but individual aspects (whether that be different branches, salespeople, or different product lines) can help you make crucial decisions.

Of course, that information needs to be tempered with your own knowledge of the business. Perhaps a particular branch seems to be underperforming because it’s recently had staffing issues and is rebuilding. Perhaps a given product line looks more valuable than the others, but you know an upcoming competitor launch will change that.

Your accounts don’t lie. But understanding what they’re telling you isn’t always straightforward, and a good accountant can help.

Cutting The Right Costs

Profit equals revenue minus costs. Reducing costs therefore means more profit. Put like that, it seems a simple equation. Of course, cutting the wrong corner can be catastrophic; shifting supplier based on price only works if the new product is good enough for the job you need it for.

A good accountant will help you identify where costs are surprisingly high. This tells you where to focus your efforts to have a greater impact.

In a recent conversation with a managing director he mentioned that after he changed accountant, the breakdown of payroll costs he received was much clearer. This made it much more obvious what the actual cost of each team member was, as well as helping him see the true cost of the recruitment process. From there, it’s easy to see how an overhaul of team structure can lead to smarter decisions.

Insight into Tax Obligations

Your accountant should be up to date on all legislation and regulations that might affect the business’ tax liabilities and opportunities, from being clear on what expenses can be claimed through to identifying opportunities to increase tax efficiency.

Dealing with your business’ tax obligations should never be an afterthought. Proactive planning in this area can greatly benefit the company.

Managing Cashflow

An accountant is used to thinking about finances in terms different lengths of time; we deal regularly in biweekly, monthly, quarterly, and yearly reports. This places us perfectly to help you form a clearer picture of your cashflow, identifying seasonal shifts as well as other patterns that can affect your liquidity.

In turn, this tells you when it’s safe to make bigger investments and when you’d benefit from being careful with your resources.

To get the ball rolling on your relationship with an accountant you can depend on, get in touch.

The post Could Your Accountant Accelerate Your Growth? first appeared on ICS Accounting.

We wanted to take you through the most common points of confusion or stumbling blocks, so that if you’re getting ready to start the process (including as a contractor limited company) you know what to expect and whether you’ll want any support.

What is a Company Formation Agent?

Company formation agents work with businesses to assist with company formation. That means they’ll help you determine and set up your company structure and generally streamline the process.

You’ll occasionally hear them called secretarial agents. We have acted as secretarial agents for many businesses.

Do I Need a Secretarial Agent?

No, you don’t need a secretarial agent yourself – but they work they’d do still needs to be done.

If you register as a company with Companies House (online or by post) you’ve done everything you need to do. Of course, the registration process can be a little more complicated – the government offers step by step guidelines which will give you some idea.

As such, many business owners like to have someone experienced to assist them when collating documentation for registration.

Can I Set Up a Limited Company While Employed?

Broadly the answer to this is yes, but we’d recommend you check your employment contract first; there are no restrictions in law, but your contract may have clauses that would affect this. This is especially true if you’re setting up a consultancy in the same field you’re employed in.

What Documents Do I Need for my Limited Company?

There are two key documents required to form a limited company. These are the Memorandum and Articles of Association.

Taken together, these set out the details of your business activity and your intent for form a company.

In addition to these documents you will need to set out an address for your registered office, as well as the names and addresses of your directors, shareholders, and other people of importance to the business.

Do Limited Companies Have Minimum Turnover Requirements?

We run into this question surprisingly often. The answer is no, there’s no legal minimum, but companies must register for VAT when their annual turnover exceeds £90,000 (at the time of writing) and this may be why people think limited companies have a minimum turnover.

We will also note here that if your annual turnover is not particularly high, financially it may make more sense to defer company formation for the time being. However, especially as company formation affects questions of liability as well, we wouldn’t want to give an approximate value for this figure as it will depend on your specific circumstances.

Instead we recommend you consult an expert – we’d be happy to discuss it!

How Much Does Registering a Limited Company Cost?

At the time of writing, the fee to register your limited company online is £50, or £78 if you require your company to be incorporated on the same day you register. If you register by mail, you’ll pay £71.

For the most part, there’s no need to organise same-day registration; when we’ve seen it before, it’s usually been because a time-sensitive contract needs the company to be incorporated before it can be signed.

Errors in your registration can lead to penalties when they are discovered. That’s one reason secretarial agents are so often involved.

Do UK Businesses Have to be Registered?

Limited Companies must register with Companies House and HMRC. Other businesses do not need to register with Companies House but almost all of them will need to register with HRMC; the only exception is for sole traders who earn below £1000 annually.

HMRC may penalise the business with fines or increased interest if it is found you didn’t register when you should have done.

The post Your Guide to Company Formation first appeared on ICS Accounting.